GST Registration can be Cancelled with Retrospective Effect only when Consequences are Intended and are Warranted: Delhi HC [Read Order]

In a recent decision, the Delhi High Court observed that the GST registration can be cancelled with retrospective effect only when consequences are intended and are warranted.

The Petitioner impugned the order dated 27.02.2023, whereby the GST registration of the petitioner was cancelled retrospectively with effect from 11.01.2020 and also impugned the Show Cause Notice dated 08.11.2022.

Vide Show Cause Notice dated 08.11.2022, petitioner was called upon to show cause as to why the registration be not cancelled for the following reasons:- ““returns furnished by you under section 39 of the Central Goods and Services Tax Act, 2017.”

The counsel for the petitioner submitted that petitioner could not file the returns on account of lapse on the part of the accountant, He submits that petitioner is aggrieved by the retrospective cancellation of registration with effect from 11.01.2020 and that registration should have been cancelled from the date of 08.11.2022 ie the date when the show cause notice was issued and the registration was suspended.

The counsel also submitted that the petitioner would apply for fresh registration.  

A Division Bench comprising Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period.”

“Although, we do not consider it apposite to examine this aspect but assuming that the respondent’s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted” the Court concluded.

To Read the full text of the Order CLICK HERE

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